A month has gone by since the last earnings report for HMS Holdings (HMSY). Shares have added about 4.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is HMS Holdings due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
HMS Holdings Q2 Earnings and Revenues Top Estimates
HMS Holdings reported adjusted earnings of 34 cents per share in second-quarter 2019, which surpassed the Zacks Consensus Estimate of 26 cents by 30.8%. The bottom line also surged 36% from the year-ago quarter.
Revenues totaled $168.2 million, which beat the Zacks Consensus Estimate by 5.5%. Moreover, the top line improved 14.6% on a year-over-year basis.
Q2 Segmental Analysis by Product
Analytical Services
Revenues at this segment were $63.1 million in the second quarter, up 37.2% year over year.
Within Analytical Services, PI revenues (excluding Medicare RAC) amounted to $38.6 million, up 23.7% year over year.
PHM revenues totaled $14 million in the quarter under review, down 5.4% on a year-over-year basis.
COB
Revenues at the COB segment grossed $105.1 million in the second quarter, up 4.3% year over year.
Margin Analysis
Total cost of services in the reported quarter was $99.6 million, down 1.4% year over year.
Gross profit came in at $68.6 million, which surged 49.9% from the prior-year quarter figure. Gross margin was 40.8% of net revenues, up 960 bps year over year.
Selling, general and administrative expenses totaled $28 million, up 5.7% year over year. Operating income in the second quarter was $40.5 million, against operating loss of $0.8 million in the year-ago quarter.
Financial Update
Cash and cash equivalents amounted to $268.7 million, up 50.1% from the year-end 2018.
Net cash provided by operating activities for the six months ended Jun 30, 2019, came in at $78.1 million, compared with $23.7 million from the year-ago quarter.
Guidance Raised
For 2019, the company now anticipates revenues between $650 million and $660 million (up from the previously guided range of $640-$650 million). This depicts year-over-year growth in the band of 8.6-10.3%. The mid-point of $655 million is above the Zacks Consensus Estimate of $646.9 million.
Net income is expected in the band of $85-$90 million (up from the prior band of $64-$70 million), indicating growth in the range of 54.5-63.6% year over year.
Adjusted EBITDA is expected in the range of $185-$190 million (up from the previously guided range of $170-$175 million), suggesting improvement of 14-17%.